Yum China Q4: EPS Beat, Revenue Miss, Dividend Hike & More

Yum China Holdings, Inc. YUMC shares are trading higher on Thursday after the fourth-quarter FY24 earnings result.

The company reported fourth-quarter revenue growth of 4% year-on-year to $2.595 billion, missing the analyst consensus estimate of $2.631 billion.

Total system sales rose 4% year over year, excluding currency effects, due to a 5% increase in net new units.

Same-store sales were at 99% of last year’s level, with same-store transactions up 4% in the quarter.

KFC’s system sales grew 5%, delivery sales grew 16%, contributing approximately 42% of KFC’s Company sales.

Pizza Hut’s system sales rose 3%, delivery sales grew 6%, contributing 42% of Pizza Hut’s Company sales.

Core operating profit grew 35% and the margin expanded 140 basis points to 5.8% vs. 4.4% a year ago quarter. Adjusted EPS of $0.30 beat the consensus estimate of $0.29.

The company held $1.8 billion in cash and equivalents as of December 31, 2024. Operating cash flow was $1.4 billion for twelve months.

The company opened 534 net new stores and reached 16,395 stores as of December 31, 2024.

The company returned $1.5 billion in capital to shareholders for the full year and $248 million in the fourth quarter.

As of December 31, 2024, approximately $1.3 billion remained available for future share repurchases under the current authorization program.

Dividend: The Board declared a 50% increase in the cash dividend, raising it to $0.24 per share on Yum China’s common stock, payable on March 27, 2025, to shareholders of record as of the close of business on March 6, 2025.

Share Buyback: Yum China has entered into share repurchase agreements in the U.S. and Hong Kong for an aggregate repurchase amount of about $360 million through open market transactions for the first half of 2025.

The company said it is on track to return a total of $4.5 billion to shareholders between 2024 and 2026.

Joey Wat, CEO of Yum China, said, “We have steadily improved our metrics since the second quarter, with improvement in same-store sales index, margins, and operating profit growth each quarter. These results demonstrate the resilience of our business and the effectiveness of our strategy in improving sales and profitability amid challenging market conditions.”

“Looking ahead, we remain excited about the significant growth opportunities in China. With tailored store models, we are expanding through both Company-owned stores and franchise stores and are on track to achieve our goal of 20,000 stores by 2026. “

Outlook: For FY25, Yum China targets approximately 1,600 – 1,800 net new stores and capital expenditures of $700 million – $800 million.

The company plans to return $3 billion to shareholders from the beginning of 2025 through 2026.

Yum China sees the franchise mix of net new stores to gradually increase to 40-50% for KFC and 20-30% for Pizza Hut over the next few years.

Price Action: YUMC shares are trading higher by 7.56% at $48.96 at the last check Thursday.

Photo by Tony Papageorge via Shutterstock.